Would financial incentives stop the rise of cybercrime?

The law in its current state doesn’t seem to be helping to lower the rate of cybercrime. Lawyer Stewart James discusses the impact of legislation on cybercrime and other options for reducing it.

Stewart James
April 1, 2015

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If the principal purposes of criminal law are to punish and rehabilitate criminals and to deter others from offending, why has there been such an explosion of cybercrime over the past few years? Is it because criminal law does not really deter criminals and, if so, could the law be used in better ways to prevent the continued rise of cybercrime?

The Serious Crime Act 2015 received Royal Assent and became law on 3 March 2015. Its provisions include amendments to the Computer Misuse Act 1990, which create new criminal penalties of life imprisonment for unauthorised acts causing serious damage to welfare or security, and 14 years’ imprisonment for serious damage to the economy or to the environment. The Serious Crime Act also extends the international reach of the Computer Misuse Act to capture the activities of UK residents committing crimes abroad, and foreign nationals committing crimes within the UK.

This is not the first time that the Computer Misuse Act has been updated - in fact, it has been updated on at least 11 previous occasions over the last 25 years. As a result, the Act provides sanctions against a wide range of cybercrime, including unauthorised access to computer systems and unauthorised acts with the intent of disrupting the use of a computer system.

The Computer Misuse Act is also supported by a range of other legislation, including the Protection from Harassment Act 1997 (that protects against cyber-bullying), and the Wireless Telegraphy Act 2006 (which protects against the interception and disclosure of messages). Together, these provide an adequate range of criminal sanctions with which to prosecute offenders and should have sufficient deterrent effect.

Despite all of this, the latest Ponemon Institute report on cybercrime (the 2014 Cost of Cyber Crime Study) indicates that cybercrimes are occurring more frequently, with an increase of 176 percent in the number of attacks since the study was first conducted in 2010.

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Crime is generally perpetrated by people who feel comfortable with breaking the law, whether intentionally or reckless of the criminal consequences of their acts, or by people who are ignorant of the law. Additionally, the anonymous nature of the internet, its lack of borders and the opportunity to industrialise the process of committing crime makes cybercrime an efficient, low-risk activity.

Even where international conventions, such as the Budapest Convention on Cybercrime 2001, are established to provide cooperation between national law enforcement agencies, the provisions of these agreements are typically diluted by the need to achieve consensus between the participants. The result is that the criminal law does not operate to effectively prevent cybercrime.

Corporate drivers

Despite the large number of studies conducted on behalf of governments and businesses, there is no consensus on the real cost of cybercrime. Accordingly, taking preventative measures against cybercrime can be seen as an unnecessary cost, business distraction and barrier to business when balanced against the risk of cybercrime occurring and the remedial costs. Cyber-specific insurance can also be purchased to reinforce the credibility of such a strategy, and its appropriateness is further reinforced when large corporations do not seem to suffer significant or lasting reputational harm or significant regulatory fines.

Consequently, preventative measures against cybercrime seem to be seen as an issue that can be resolved by technology, ignoring, for example, its social engineering dimension.

Public sympathy for companies that are the victim of cybercrime will eventually wane, particularly where theft of personal data leads to identify fraud. Regulators can also be expected to take an increasingly stringent view of the appropriateness of the technological and organisational measures taken by businesses to protect information, and shareholders will take more interest where brand image is damaged and share values are reduced. These are medium-term drivers for change, where there is a more immediate need to drive good corporate behaviour.

An alternative approach

A more effective approach to collective security would be for government to encourage good corporate behaviour through the use of tax credits or similar schemes that provide a commercial incentive. The UK Government's Cyber Essential's initiative aims to achieve collective security for government by requiring all suppliers to the public sector to meet certain technological standards. This operates like a kitemark, but it does not do enough to encourage wide-scale adoption in the private sector.

The internet is a commercial vehicle controlled by business, and businesses are guided by the drive to be profitable, or at least to reduce overheads. Costs, like insurance, are a necessity that doesn't deliver profit, which includes expenditure on cyber-security. Public or shareholder demand will eventually require business to adopt more stringent cyber-security measures, but this will take time.

The creation of more criminal sanctions will not change the legitimate activities of business - but offering a financial incentive might, and spending on more security might also generate more economic growth in the process!